Amid increasingly apocalyptic prophecies about the fate of  New York’s commercial property market, more than a dozen “Masters of Real Estate” convened at the Metropolitan Club on Tuesday for an eponymous conference hosted by The Observer devoted to making sense of the market’s troubles. The major players appear to have emerged from the recessionary trenches leaner, shell-shocked, and hungry for deals, though some panelists were more upbeat than others about the prospects for a long-term recovery.

Tishman Speyer CEO Rob Speyer, William Rudin, president of Rudin Management, Richard LeFrak, chairman of the LeFrak organization and Related's Stephen Ross were among those who spoke on panels like "How Will New York Real Estate Be Re-Invented," evincing a positive outlook while expressing some caution that the real-estate community would have to watch government closely

Regardless of the panelists’ outlook, “people are scratching their heads saying, ‘Where’s the stress,’” observed SL Green’s CEO, Marc Holliday, who moderated the second panel on “When/Where Will the Smart Money Come Off the Sidelines.

Some participants argued that even if the market does recover sooner rather than later, investors cannot expect the outsized returns they became accustomed to when New York property values were at their peak in 2006 and 2007.

editorial@observer.com

A frequent theme at today's Bloomberg Real Estate Briefing was just how great New York City real estate is. But there is one other place that all the machers look fondly on--perhaps making them the only people in the country who do so: Washington, D.C.

Even the politicians don't like it, at least not the Tea Partiers, and while that has Henry Elghanayan worried about what D.C. might do to New York, most of his colleagues argued today that Washington is a great place to invest, now and for the foreseeable future.

Fried Frank's Jonathan Mechanic: "I don't think people are afraid of the Washington market just because of the change in Congress. We still have big government and a split government, and there's a lot of problems to be worked out still, so there will be plenty going on."

John Catsimatidis: "Washington will not stop growing, no matter who's in control. It's a disease they have there. If there will be cuts, it will be in different parts of the country."

David Levinson, who said his L&L Holdings just got outbid for a project on Connecticut Avenue:  "The government has a tendency, they fire 500 people and then go hire 500 consultants, so there is always high demand. ... The average price is in the mid-40s gross, but it's 58 net on new buildings, almost double the rent on new buildings there."

Richard LeFrak: "The thing I worry about the most are that the GSEs [Government-sponsored enterprises] are natural targets, both for the Republicans and the Democrats. Freddie Mac? Who is it? Most people just know it as something bad that happened to their mortgage. That makes for an easy target. ... That could change the rezzies [residential developers] quite a bit. We're benefiting from rates that are very low."

mchaban [at] observer.com | @mc_nyo

On a recent late-summer conference call, William Rudin, Michael Rudin and Samantha Rudin Earls—three members of one of New York City’s most venerable commercial real estate families—were engaged in a bit of dactylonomy.

The three weren’t trying to come up with the number of buildings currently in the family’s commercial and residential portfolio, but rather were adding up the number of family members currently working at the company.

“That’s two, four ...” Some names were mumbled. After a little back and forth, they settled on nine.
In a city known for the prominence of a handful of families in commercial real estate, single names like Rudin, Durst, Rose, Muss and LeFrak have come to symbolize the industry. These families have survived the worst economic catastrophe since the Great Depression while witnessing, along with the rest of us, the rise of real estate investment trusts, the top three of which now have a combined New York portfolio of roughly 67.6 million square feet.

In a era when the word ‘dynasty’ is often overused and left to trail behind words like—let’s face it—‘sports’ or ‘Kardashian,’ it finds true meaning when one surveys these biggest families in New York commercial real estate. Many of them, after all, are generations old and still control vast portfolios of properties while wielding the type of power that only comes with reputation and recognition.

Lew Rudin, Bill Rudin and Jack Rudin.

They’re also doing something else quite extraordinary, given the times: they’re building. This past spring, Richard LeFrak and his sons spoke to The New York Times about their 600-acre mixed-use Jersey City development called Newport, which had entered its final phase. And, according to a spokesman, excavation work is underway on the site for Durst Fetner’s multifamily tower on West 57th Street and the West Side Highway.

New York real estate is a tough business to break into, and the next generation of these families’ commercial real estate elites is poised to take the reins, even as some young upstarts—undeterred by a family background that doesn’t include vast real estate holdings—look to make their mark.

One member of that next generation, Ms. Rudin Earls—vice president at Rudin Management and great-granddaughter of Sam Rudin, who founded Rudin Management Co. along with his brothers—was almost bound for a different stage.

“I studied theater at Tisch at NYU for four years, and guess I didn’t have enough courage, really, to go out on auditions,” Ms. Rudin Earls explained while on the call with her father and brother.

The next-next generation of Rudins was on the call as well—Ms. Rudin Earls’s newborn daughter. She didn’t have much to add, but her presence on a call about the family business wasn’t out of the ordinary in the context of how talent is cultivated at Rudin Management.

“I would go to meetings, because our father would always invite us to meetings, even before I started working,” Ms. Rudin Earls remembered. “In 2007 I started to work full time and then one day realized, as I was walking though the lobby of our office building—345 Park—that it just felt like home to me, and I’ve never really looked back.”

Ms. Rudin Earls said that, though she still loves the theater, she was drawn in by the appeal of working for her family, whose New York office holdings alone are sizeable.

For Samantha’s brother Michael, an associate at Rudin Management, a desire to learn about the family business was solidified during the dark days following September 11, 2001. Hard times for all, they were made even darker by the death of his grandfather, Lewis Rudin, then head of the family dynasty, a little over a week later.

“I took a semester off of high school after our grandfather passed away,” he said. “I basically shadowed my father for about six months to really learn exactly what it was that our family did in real estate.” He was 16 at the time, and said that it was the first time that he could really grasp what the family did, at least in any significant way. Bill Rudin later pointed out that the idea for the time off was his wife Ophelia’s.

Regardless, after a little in-depth exposure, Michael said he knew the real estate business was for him.

Both siblings said there was no pressure to join the business—they came to it on their own, though both were immersed in it growing up. Steve Spinola, president of the Real Estate Board of New York, which will soon see another member of this new generation ascend to its chairman spot, said that this immersion is a key factor.

“For those who have grown up observing the business and experiencing it daily, the vision is innate, and it’s exciting to see what each subsequent generation will do to build upon the legacy that has been left to them,” Mr. Spinola said. “As we welcome our soon-to-be-chairman, Rob Speyer, who will be the youngest and also the first third-generation [member] of the same family to hold the title, it is clear that the younger generations of real estate families continue the tradition of a deep understanding and commitment to our city.”

Jason Muss, a principal at Muss Development and great-grandson of Isaac Muss, the firm’s founder, said that New York real estate is exciting because of its scale. For him, growing up within the business sparked an interest, but he’s quick to point out that getting into real estate without the family name “just would have been a different process.”

Isaac Muss founded Muss Development, the company Jason now leads with his father, Joshua, in 1906. Over the years, the company has owned, developed and managed about 15 million square feet of commercial real estate throughout the five boroughs and Long Island. Among its current roster of projects are the 1.5-million-square-foot, mixed-use Brooklyn Renaissance Plaza and New York Marriott at the Brooklyn Bridge, the conversion of 36,000-square-feet at 345 Adams from office to retail and the Oceana Condominium & Club—15 buildings and 1.2 million square feet on the ocean in Brighton Beach.

Like others in the real estate families’ younger generation, he said he was genuinely interested in the field and didn’t feel pressured by family members.

“I thought I was going to be a baseball player when I was about 10,” Mr. Muss said, laughing. “Besides that, listen, I went to law school probably thinking that it was going to be more like business school than law school. I didn’t intend to practice, but it’s a very helpful thing for the real estate world. So I never really thought about doing anything else.”

He’s been working for the family business since he graduated from NYU School of Law in 1996.

But in addition to being realistic about the doors that being a Muss opened—“It puts you on a faster track, maybe”—he also insists that it isn’t a requirement, and that those open doors come with not a small amount of responsibility.

“It’s something that you have to constantly think about and make sure that you’re living up to past generations—that you’re doing things the right way,” he cautioned. “People know that behind the name there’s a certain reputation, which we’re very fortunate to have, in terms of integrity and the way that we do business. All of us here benefit from that and make sure not to screw it up. That’s job one: Don’t screw up the reputation.”

For every real estate dynasty looking to preserve a reputation, however, there are dozens of young upstarts busily building theirs. They’re also busy building something else that dynasties generally have in abundance—capital.

“If you’re speaking to real estate families—third- or fourth-generation guys—they’re focused on preserving wealth,” said Gregory Jones, who along with his brother Graham started GRJ—a fund that has been buying multifamily properties in Manhattan, starting with the purchase of 227 East 89th Street in November 2011.

They’re good-looking and well-dressed and look more upstairs than downstairs, more Bridgehampton than bridge-and-tunnel. But the New Jersey brothers said they weren’t funded by anyone. “Graham and I used our own savings,” Gregory Jones said of how they got their start. “We were not funded by anyone, we were not financed by anyone, we didn’t have any investors ...”

Before buying 227 East 89th Street, they had deposits on several buildings, only to have the deals fall through. It was a hair-raising process, one that involved putting large amounts of their personal savings down—Graham’s earned while working at a real estate private equity firm and Gregory’s from banking.
It also involved a great deal of savvy and ingenuity in finding buildings to target in the first place.

“Nobody knew that 227 East 89th Street was for sale,” Graham said. “You can’t buy anything that Massey Knakal is sending out to you. You’ve got to bring some type of value to what you’re doing.”

Following 227 East 89th Street, a five-story walk-up between Second and Third Avenues, the brothers bought three multifamily buildings at 50-58 East Third Street, bringing their total portfolio of buildings to four. They said that they anticipate making an additional purchase before the year is out, proving that the toughest part about breaking into the business may simply be gaining traction and momentum.

Part of the whole process of breaking in has to involve finding ways to compete with the dynasties, or at least circumvent them. So in addition to finding smaller deals like 227 East 89th Street that aren’t actively being marketed, the brothers also compete, they said, by sticking their necks out further.

“Honestly, we spend a good amount of our time cold-calling owners and trying to get them to sell us their buildings,” Gregory said.

“We take a lot of risks that other people aren’t willing to take, because at the end of the day we really don’t have any option,” added Graham. “It’s not like throwing darts at the dartboard, but we’re willing to make bets that other people might not be willing to make.”

Samantha Rudin Earls and her brother Michael currently help run Rudin Management with those numerous relatives they counted off—including their uncle Jack, who is chairman, and their cousin Eric, who is vice chairman and president.

The siblings both worked on the recently 100-percent-sold 130 West 12th Street—the family’s condominium development, which was marketed by Stribling Marketing Associates.

“I actually just had a baby, and the day my baby was born we had our first closing, and it felt like that was sort of my first baby,” Ms. Rudin Earls said. “It was such an amazing experience working with the architect and the marketing team, Stribling, and our family and the designers from Jed Johnson—Arthur Dunnam and Heather Moore.”

Michael, who stayed out in Colorado after graduating from the University of Colorado at Boulder, moved to Aspen to pursue real estate opportunities of his own and “to get my feet wet a little bit,” as he describes it. He subsequently bought a commercial building there that is currently being redeveloped.

“But when I started working for the family full time about three years ago, [that] was right around the time that we started working on 130 West 12th Street,” he said, adding that the Saint Vincent project has also been “pretty amazing to work on,” for the vantage it has provided on the different stages of development.

With their different educational backgrounds—Michael studied urban planning—the siblings bring different eyes to challenges facing commercial real estate in New York today, like sustainability and marketing. William Rudin said that it was crucial to pay close attention to ideas coming not only from his children, but from the other young people who work for the company.

“There’s no question about it,” he said. “And I think Eric and my sister Beth and my other cousins—for us, we get in a room and have discussions, and everybody puts their ideas on the table and vets them.”

He credits Michael with adding to the company’s knowledge base in sustainability and Samantha with design and marketing touches—like using pieces from her Aunt Beth Rudin DeWoody’s internationally renowned art collection to stage apartments at 310 West 12th Street. People came for the art and ended up buying. “That’s thinking outside the box and connecting the family into the whole process,” William Rudin said.

And what about that youngest Rudin on the call? Are family members already scoping out a career in commercial real estate for her? “She’s going to be a fashion model,” Samantha said of her daughter. “When you got it, you got it.”

It could be up to a year before the New York Daily News and U.S. News & World Report are allowed back into their 4 New York Plaza headquarters, which were “wiped out” by Hurricane Sandy, Mortimer B. Zuckerman said today.

Like many companies in Lower Manhattan, both publications were forced to relocate after 11-foot tidal surges caused flooding and electrical outages in the area.

“We have just leased some other space for nine months to a year just to make sure that we can keep the magazine and the newspaper going,” the chairman of Boston Properties said at the Observer Media Group's Masters of Real Estate conference. “We suffered dramatically on the publishing side because the U.S. News and the Daily News offices were at the southernmost part of Manhattan and their offices were just destroyed.”

The Daily News.

The Daily News admission was one of many during an all-day series of panels that included thoughts on this week's presidential elections and detailed explanations of how real estate professionals have used their resources to help victims of Superstorm Sandy. Richard LeFrak, in particular, said he was able to relocate as many as 150 ground-floor tenants hit hardest by the storm.

Mr. Zuckerman, who is publisher and owner of the Daily News and editor-in-chief of U.S. News, said that in addition to the devastation at 4 New York Plaza, which the publications moved into last summer, the companies’ Jersey City printing facilities flooded and lost power as a result of Sandy.

But what was “in one sense a terrible experience was in the other sense a wonderful experience,” he added, expressing gratitude for a group of unnamed businesses that offered a helping hand to get the two publications back on their feet—and the Jersey City plant up and running at full capacity, as of yesterday.

“There was just a tremendous feeling of community—everybody was helping everybody else,” he said.

A law firm “moved their offices around” and “loaned” the paper temporary office space to house members of the publications’ sales force, said Mr. Zuckerman, while The New York Times, Newsday, the Star-Ledger, The Bergen Record and The Hartford Courant offered up their printing presses when the Jersey City plant went out of commission.

“We weren’t able to do 700,000 papers, but we able to do 250,000—not of the same quality, but we got them out,” he said.

A Daily News spokesperson confirmed the law firm as Proskauer Rose, which is the anchor tenant of 11 Times Square, adding that the The Jewish Week also housed some Daily News employees.

The spokesperson said that a majority of the paper's Manhattan employees are now working at the Jersey City plant, with a portion of its reporters also in its Bronx, Brooklyn and Queens bureaus.

Mr. Zuckerman would later engage in a friendly sparring match with Larry Silverstein over the prospects for the city and country’s direction. Mr. Zuckerman took a highly pessimistic tone, but not before making his position on the support he received in the aftermath of the storm clear:  “We come out of it with gratitude to be part of the New York City community, which is still in my judgment the most generous and the most supportive community,” he said.

Mr. Silverstein said his buildings were relatively unaffected by the storm, including those in and around the World Trade Center site.  But he chimed in with a piece of advice when discussion turned to the rebuilding effort and the future of New York City development.

“One of the lessons we learned from 9/11 is that a good place to put generators is not down at the bottom, it’s at the top,” he said, adding that all current and future Silverstein Properties construction will place mechanical equipment and generators on high floors.

The road to recovery will likely be a long one. As of yesterday, 44 of 183 Class A and Class B buildings remained closed in Lower Manhattan, according to the latest data from Jones Lang LaSalle, accounting for 32.8 percent of the total 101,175,754 square feet of inventory.

“We have to use our talents and be creative in coming up with ideas,” said William Rudin, chief executive of Rudin Management Company and the moderator of the first of three panels at today's event, which also included Mr. LeFrak and Jeff Blau of Related Companies.

“Bear in mind, there’s a new normal … we designed for an 11-foot surge and now there are 13- and 14-foot surges, and they could go higher,” said Mr. Rudin, who is chairman of the Association for a Better New York, adding that Mr. Blau, who said his buildings did not suffer significant damage, had called him to offer support.

“We have vacant land in the boroughs that we can offer to the city, the state, the federal government for interim housing short-term relief—so that’s going on,” Blau said. “With Richard, Jeff Gural [chairman of Newmark Grubb Knight Frank] opened up the Meadowlands to Red Cross workers who cooked thousands of meals.”

Mr. Blau said his company has been working with the Department of Housing Development and Preservation and the city to create a log of available units and ultimately provide them as affordable housing to displaced residents.

The Related Companies is also working with FEMA to potentially provide 600,000 square feet of retail at the Gateway Center in Brooklyn for housing purposes. Mr. Zuckerman added that, despite its troubles, the Daily News had raised hundreds of thousands of dollars” for those displaced by the storm.

Meanwhile, despite widespread damages to Mr. LeFrak's portfolio of buildings in New Jersey and New York, his battalion of plumbers, electricians, building managers and a variety of other employees snapped into action in an effort that helped restore the assets and make them habitable for residential tenants living in his buildings.

“We have about 40 high-rise buildings that were affected by the flood, probably 7,000 residential units and close to 5 million square feet of office space that was part of the surge,” Mr. LeFrak said.

“Because we have a big inventory of housing, and because I can mobilize an army in about an hour, I was able to actually restore all my properties within four days and relocate about 150 tenants who lived on ground-floor apartments that were uninhabitable, and basically provide hot water, electricity and heat," he added.

More than 300 real estate professionals crowded the Metropolitan Club early Thursday morning, despite snow-covered sidewalks, for the Observer Media Group’s third annual Masters of Real Estate forum.

Sponsored by Fried Frank and Marks Paneth & Shron, the event drew boldface names like Larry Silverstein and Mortimer Zuckerman, who spoke about the devastation wrought by Sandy, not to mention financiers like Angelo Gordon & Co.’s Adam Schwartz and Rockpoint Group’s Keith Gelb, who weighed in on opportunistic investments.

Below, reporter Al Barbarino walks the room and listens in on the panels, striving to put his finger on the commercial real estate industry’s pulse, minute by minute.

New York real estate veterans from Richard LeFrak to Sheldon Solow were featured on Forbes' annual list of the world’s billionaires. In total, 1,426 individuals made the list with a combined net worth of $5.4 trillion.

Richard LeFrak was the highest-ranked New York real estate titan on the list, at number 225 (number 69 in the United States), with an estimated net worth of $5.4 billion. Mr. LeFrak was number 63 on the 2012 Forbes 400 list of the richest people in America.

Stephen Ross followed, ranked at numbers 286 and 90 in the world and United States, respectively. Mr. Ross, who stepped down as chief executive of Related Companies in 2012, has an estimated net worth of $4.4 billion. He was ranked 83rd on last year’s Forbes 400 list.

Sheldon Solow

Leonard Stern of Hartz Mountain Industries checked in at number 308, and just made the top 100 in the U.S. at number 98, falling from 89^th in the 2012 Forbes 400. Mr. Stern’s estimated net worth is $4.2 billion.

Sheldon Solow, who recently sued a number of major investment banks over fixed income losses, features on the list at number 363. Mr. Solow, with an estimated net worth of $3.7 billion, ranked number 120 in the U.S., down from 113 in the 2012 Forbes 400.

Jerry Speyer and Donald Trump were locked together at number 423 on the list, both with an estimated net worth of $3.2 billion. At number 139 in the U.S., both Messrs. Speyer and Trump fell from their Forbes 400 rankings, 132 and 128, respectively.

No one on the New York real estate list, which also featured Mortimer Zuckerman and Leon Charney, could match Donald Bren of Newport Beach, CA. Mr. Bren, chairman of the Irvine Company, was ranked 69^th on the billionaires list with an estimated net worth of $13 billion. Mr. Bren’s wealth ranked him 26^th in the United States, down from number 24 on the 2012 Forbes 400 list.

Last week, Stephen Ross, chairman of Related Companies, became the latest signatory of the Giving Pledge. The campaign, an effort to invite the world’s wealthiest individuals to pledge to donate half of their wealth—or more—to philanthropic causes, was started by two of America’s richest men: Warren Buffett and Bill Gates.

Mr. Ross, worth $4.4 billion according to Forbes, is perhaps best known in philanthropic circles for his $100 million donation to the business school at the University of Michigan, his alma mater.

The donation, the largest ever to an American business school, resulted in its renaming as the Stephen M. Ross School of Business. Inspired by Mr. Ross’s pledge, The Commercial Observer checked in on the philanthropic efforts of other real estate titans.

Last Thursday, Feb. 24, while journalists craned their recorders like goslings waiting to be fed, Democratic Senator Adriano Espaillat of the Bronx and Northern Manhattan gave the assembled tenant activists what they wanted.

“We will go down to the wire,” he said after the rally. “This is a 15-round fight.” Professional boxing matches are now only 12 rounds. Whatever. “This will be a 15-round fight.”

New York State’s rent-regulation law, which governs the rents for more than one million stabilized apartments in the city, expires June 15, but Democrats have already thrown the opening punch. State Assembly Speaker Sheldon Silver says that rent regulation must be renewed and strengthened in favor of tenants. If it isn’t, he will not support the renewal of a tax incentive that expired in December and was beloved by big apartment developers.

Mr. Silver’s move pits the two sides of Big Real Estate against one another-developers vs. landlords-and puts their onetime favorite candidate, Andrew Cuomo, in the middle.

“We shouldn’t be extending a tax break for residential developers without making sure we are strengthening protections for the tenants who live in their buildings,” Mr. Silver said in a statement last month, which his staff reiterated through an email to The Observer. In fact, the developers of shiny new condos, who stand to benefit the most from the credit, called 421-a, are distinct from owners of the older buildings that primarily house the city’s rent-stabilized apartments.

A Cuomo spokesman said the governor is “open to everything,” though he is not confident a deal will be reached before April.

On one side, the governor has his biggest donors in the 2010 election-developers and landlords, including his top two donors, Jerry Speyer and Daniel Tishman, who contributed a combined $187,400. And on the other side, liberal activists and the politicians they help elect, including Speaker Silver. (And never mind that some in Big Real Estate remember Mario Cuomo, who as governor himself spearheaded the late ’80s tax changes that industry people say all but halted real estate trades.)

At last week’s rally, the crowd of a dozen politicians and several times more aides and activists recited their new mantra, out of sync but passionate: “Put it in the budget! In the? Budget! Governor Cuomo can do it in the budget! Governor Cuomo must do it in the budget!”

To say rent stabilization is a flash point for the real estate industry understates the issue. It is their Lenin lite, a socialist weed poking through New York’s capitalist grange. Kill it, and a million more tenants would be available to pay market-rate rents. As it stands now, the deregulation threshold is $2,000 a month; however, those tenants are protected by annual income benchmarks.

“What if the city said, ‘If you own a car, one day a week you have to let somebody use your car because we have a transportation problem in the city’?” said Robert Knakal, chairman of the city’s biggest investment-sales brokerage, Massey Knakal, who has brokered the sales of billions in apartment stock. “‘You own this building, you pay for it, but you can’t charge what the market will bear because we have to protect tenants.'”

The topic clearly rankles. “I have Richard LeFrak to speak with you,” a brisk voice said when The Observer answered a recent ring. Then, sans pleasantries or an introduction, Mr. LeFrak, head of one of the city’s biggest and most storied real estate concerns, said: “I only have 14,000 of those things [rent-stabilized units] and it’s a relatively minor part of my business. … My comment is that it’s not that significant in my world. … I just built 4,000 apartments on the West Coast and none of them are rent-stabilized. That’s my comment.”

Last week, the Port Authority of New York & New Jersey took a huge step forward in its plans for a new bus terminal to replace its 65-year-old terminal on Eighth Avenue.

Commissioners of the bi-state agency approved a recommendation on Oct. 22 for an international design competition for the new bus terminal, which could cost up to $10 billion, and would ease travel conditions for a quarter of a million commuters a day.

Members of the Port Authority’s leadership proposed that the new bus terminal be located on Port Authority-owned land one block west of the existing terminal between Ninth and Eleventh Avenues. However, the location is not set in stone—the design firms can propose and design a terminal for a different location.

“My hope is that the design competition and study bring us innovative alternatives that enable us to reduce the costs of building a new bus terminal and find a way for us to minimize the amount of bus congestion coming into Manhattan,” RXR Realty’s Scott Rechler, who is a member of the commissioners of the Port Authority, told Commercial Observer via email.

The Port Authority’s new terminal will be funded by taxpayers, but the organization is considering selling development air rights or public-private partnerships to mitigate costs.

The Port Authority did not release any information on when the redesign process will actually begin, but the agency has set a goal to choose the new design by September 2016.

In March, the Port Authority unveiled five concepts to replace the terminal and said the project could cost between $7 billion to $10 billion, an amount that has come under some scrutiny.

“It is a number that is literally picked out the air, because without a design no one can know what the cost should be,” said Barry LePatner, a construction attorney and vocal critic of public project overruns. “It’s merely a placeholder.”

Before the design competition, there will be a request for proposals, or RFP, for a consulting firm to conduct a study of commuting capacity over the next 30 years at the bus terminal. The study will include an analysis of patterns and preferences of bus commuters, and operating and construction costs.

A Port Authority spokesman said a date for the release of the RFP has not been decided yet.—L.L.G. with additional reporting provided by Lauren Elkies Schram

In the late 1990s, shortly after Barry Sternlicht, the head of Starwood Lodging Trust (and Starwood Capital Group), went through a dramatic and highly public purchase of ITT Corporation (the conglomerate perhaps best known for Sheraton Hotels), he decided he didn’t want to keep one of the assets: Caesars Palace in Las Vegas.

“Caesars at the time had a big baccarat business—which is very volatile,” said Thomas Flexner, a vice chairman and the global head of real estate at Citigroup, who was working at Bear Stearns, Starwood’s banker at the time. In baccarat, big sums of cash go in and out of the casino quickly. Mr. Sternlicht “didn’t think that type of business should be in a public company.”

Although he was still in his 30s (he’s now 55), Mr. Sternlicht had done deals with many of the wealthiest and most successful figures in real estate from Sam Zell of Equity Group Investments to the Ziff and Burden families. It wouldn’t have been tough to find a high-wattage name to sell it to. But one of the people who approached Starwood about buying Caesars had wow potential: the king of pop, Michael Jackson.

Messrs. Sternlicht and Flexner went to Jackson’s suite at the Waldorf-Astoria to meet the music deity.

Jackson was wearing a single black glove. He had a staff photographer on call, under the assumption that anyone who met with Jackson would want to have a picture taken with him. (Both of Jackson’s guests did, naturally.)

“He was explaining how he was the inspiration for Treasure Island [in Las Vegas] and could do wonders with Caesars,” Mr. Sternlicht said.

The meeting lasted an hour and a half. Messrs. Sternlicht and Flexner came away dazed and thinking Jackson was a sweet, likable person, if not the greatest businessman they had ever met. (Mr. Sternlicht lost his photo of himself with Jackson—however, Mr. Flexner still has his.)

“I don’t think it was a very sophisticated effort,” Mr. Flexner said. “But, hey, when Michael Jackson calls, you take the meeting.”

Incidentally, a lot of people say the same thing about Barry Sternlicht. (Not the unsophisticated part.)

Mr. Sternlicht is not merely the custodian of a $77 billion real estate, hotel and debt empire—he is a creative force. The chairman and chief executive officer of Starwood Capital Group doesn’t just buy a St. Regis—he replicates it around the world. When he came up with a new boutique hotel brand, it is not just a Sheraton with a fancy lobby—it is the W Hotels. And he has acquired a reputation through the business world that draws a lot of varied figures to him.

One person who took a meeting with Mr. Sternlicht was Rusty Gregory, the chairman and Chief Executive Officer of Mammoth Resorts, who went out to Aspen, Colo., to rendezvous with him in 2005 at Teddy Forstmann’s yearly retreat.

Mr. Gregory was in the process of selling his ski resort and the accompanying real estate, all at Mammoth Mountain, in the Sierra Nevada mountains in California, and had been fairly far down the road with a bidder when Mr. Sternlicht’s Starwood had come in with an offer. (The eventual sale would be for $365 million.)

“I had heard what a smart guy, what a tough guy, Barry was from a business standpoint,” Mr. Gregory said. “[He] could be tough on his company—but was the smartest guy in the room. He had that kind of reputation.” Still, the offer was a good one, and Mr. Gregory figured this would be his final audition for the new owner.

The two men went for breakfast at the Little Nell—with Martha Stewart in sweats two tables down—and did not get up for three hours.

The brash business mogul was nowhere in sight. Instead, Mr. Sternlicht spoke about life and family. “He talked about his mother and father—very personal things,” Mr. Gregory said. “I was very impressed with him. He had a compelling personality.”

When they finally got around to discussing Mammoth, Mr. Sternlicht did something one didn’t normally see out of a guy whose living was built on numbers: He started drawing.

“He pulled out this pad, and he drew the core business of Mammoth, which was a ski mountain,” Mr. Gregory said. “And then he put hotels on the base with notations—the number of hotel rooms. Then there were the associated amenities, the spa, the restaurant.” All this wound up on the pad. Finally, when they spoke about transportation to Mammoth, he drew an airplane at the top of the page.

“I’ve been in business a long time—I’ve never seen anyone express it like this. In a very organic way. More like a designer would do it.” But he had also managed to summon up Mammoth’s business and mission at the same time.

“Unlike the majority of superstar investors, he has a fully functional right brain as well as a left brain,” Mr. Flexner explained.

*

“I actually think the U.S. economy is doing fairly well, given the headwinds it’s looking at,” Mr. Sternlicht told Commercial Observer from his office in Greenwich, Conn., speaking fluently from the left brain. “In this climate, where institutions and corporations and CEOs don’t know what they should invest in, or where, I would have expected that you’d have some kind of weak economy—weaker than this.” As for real estate, “it’s really as good as it’s been since ’91 in the States…The housing market’s on fire. Everyone talks about this sad market—it’s probably the best performing asset class in the country.”

Starwood has been putting fairly significant bets on this point of view; it picked up 23,262 residential units from Equity Residential last October in a $5.4 billion deal, and another 19,615 units from Landmark Apartment Trust in a $1.9 billion acquisition, bringing its residential portfolio to approximately 90,000 units. But the interesting thing is the geography of these purchases; they’re in the middle of the country where housing is still cheap and where job growth is on the rise.

“We stayed out of what we used to buy, which are the two coasts—certainly New York and San Francisco,” Mr. Sternlicht said.

Why?

“We thought they’re unaffordable,” Mr. Sternlicht responded, simply. “We’re really worried about the tech bubble, so we’re really worried about the Bay Area.”

When CO visited Mr. Sternlicht, the tokens of his success and his work ethic were visible. Starwood’s office building is a well-curated piece of real estate just over the New York border with a luxe gym on the ground floor and showers in the men’s rooms. Handsome pieces of art line the walls. A sea of glass awards and plaques are swept over one of the tables outside of Mr. Sternlicht’s office and his desk is overflowing with business and design plans. Photographs along the perimeter of his office show Mr. Sternlicht rubbing elbows with boldfaced names. (CO spotted two photos of Mr. Sternlicht with GOP frontrunner Donald Trump, one that also included Stephen Schwarzman and Michael Milken in the frame. But in the interest of equal time, it should be noted that Mr. Sternlicht has also played golf with the husband of the Democratic frontrunner.)

And the left, right brain dynamic, with all its inherent contradictions, was on display, too, in an hour-long conversation with CO.

“I’m an artist by nature—I love to paint and draw and sculpt,” he said. “Last count, I think I was one of two businessmen inducted into the Interior Design Hall of Fame. I’ve won a lot of awards, but that one’s my favorite one.”

He’s as contemptuous of the left wing politics in a country like France as any private equity guy. (When speaking about a deal in France he called it, “The world’s hardest market to invest in.” Why? “They’re communist,” he answered.)

But his 1 Hotels are the most ambitiously green in the world.

“They say it’s not a brand—it’s a cause,” Mr. Sternlicht said, regarding 1 Hotel, the eco-luxe boutique hotel that opened last year in Manhattan at 1414 Avenue of the Americas at the corner of West 58th Street and is gearing up to open another at Brooklyn Bridge Park along the waterfront later this year and bills itself as 100 percent sustainable. It is his favorite child amongst his business ventures. (He has three real children—a Dartmouth alum, a Brown student and a Stanford student. His children are the inspiration for the 1 Hotels brand.)

He paused and collected his thoughts.

“I do think we’re screwing up the earth—despite what my Republican friends say,” Mr. Sternlicht said. “I’m fiscally Republican. [But] I think we’re responsible for maintaining the planet, and I just don’t see any downside to doing so. If we’re wrong, and it’s not global warming, then fine. If we’re right, then we have to do this.”

The left, right brain mastery was particularly well suited to a career in hotel development. When he founded Starwood in the early 1990s, he was a shrewd enough businessman to take advantage of a little-known (and now defunct) federal law called the “paired share” real estate investment trust that allowed Starwood to own properties and management companies at the same time. This gave Starwood a notable tax advantage in that, like a REIT, it doesn’t pay taxes on its earnings, but it could manage its own properties so it didn’t have to lease out the hotels and thus pay exorbitant management fees to an independent operator.

But his sense of style and vision remained ever present. “When we were developing [1 Hotel South Beach which opened last year]—and it was a $650 million project, it was difficult to do—every plant, every tree, every blade of grass met with his scrutiny,” said Richard LeFrak, the chairman and CEO of LeFrak, who has done a number of deals with Mr. Sternlicht, including the $2.7 billion dollar acquisition of the failed commercial real estate lender Corus Bank’s CRE portfolio in 2009. “We would go into the building, and I wanted to talk about the elevators—he wanted to talk about the palm trees. But he’s a very visual person. That’s what jumps out at him.”

His career in real estate began largely with his father—who, one gets a sense very quickly, left the greatest mark on Mr. Sternlicht’s life.

When he was a young Brown University graduate trying to finagle his way into a Wall Street career, Mr. Sternlicht’s father posed one of the more indelible of life’s questions before him:

“Do you want to look at a green screen for the rest of your life?”

Maurycy Sternlicht fled Cracow as a 9-year-old to what is now the Czech Republic where he hid out with Czech partisans throughout World War II. In an obituary the family published after his death, the senior Sternlicht’s life during the war years was described as one lived in caves scrounging for food.

“He never talked about the war,” Mr. Sternlicht said. After the war, his father got an engineering degree from the University of Brussels, immigrated to the Bronx in 1951 and changed his name to Mark. Still, the weight of a life that took root during the Holocaust clearly did something to both the man and his son—as did Mark Sternlicht’s subsequent history in America.

“My dad’s business went bust,” Mr. Sternlicht said. “He was on the Chamber of Commerce here in Connecticut—he was the quintessential successful small businessman. And one day he turned around and his inventory had been stolen.” The company, which manufactured disposable flashlights, was later liquidated.

“[Barry] went to great lengths to say what kind of man that made him,” Mr. Gregory said. “He has great respect for his father—about how he handled adversity. Tremendous respect for him. But he was also this boiling cauldron of determination that this would never happen to him.”

That determination drove Mr. Sternlicht to business school at Harvard and then to Chicago in the mid-1980s where he spent several years in the real estate trenches for JMB Realty before getting a pink slip in the wake of the savings and loan crisis in the early 1990s.

He decided to start his own platform with backing from his old boss at JMB, Neil Bluhm, the Burden family and the Ziff family.

“That became Starwood Capital Group, which we named for a housing development in Aspen—which is still there,” Mr. Sternlicht said. “It was named by Dirk Ziff in his hot tub with me when I was 30.”

*

“In 1998 I went a little haywire.”

Mr. Sternlicht had started the decade picking up apartment buildings (and doing quite well at it; he bought 8,000 units in 18 months and sold them to Sam Zell of Equity Group Investments, tripling his money), but over the course of the 1990s he migrated into different asset classes starting Starwood Lodging in 1994.

However, by 1997, he saw an opportunity to pick up the hotel company, Westin, which he took. After that colossal $1.5 billion acquisition, an even bigger prize lay in sight.

ITT, the company that owned Sheraton, was being eyed for a hostile takeover by Hilton Hotels. Hilton was attempting to force ITT’s board to meet to appoint a new slate of pro-Hilton board members. (A verbal battle also ensued in the press in which Hilton’s head, Stephen Bollenbach, publicly called the head of ITT, Rand Araskog, a “weenie” and then a “superweenie.”)

“One day I woke up in the morning, I opened The Wall Street Journal, and I see that Hilton won the court case—ITT lost the ability to prevent a board meeting,” Mr. Flexner said. “I called up Barry and said, ‘Araskog is going to want a white knight.’ ”

According to a story in National Real Estate Investor, Mr. Sternlicht had beaten Mr. Flexner to the punch—he had been faxing over proposals to ITT that morning.

Starwood Hotels went into marathon round-the-clock negotiations, and in two weeks they came up with an agreement. (Mr. Flexner told National Real Estate Investor at the end of negotiations his team looked like they had “stepped out of the jungle after the Tet offensive.”)

After the agreement was announced, “it started this major PR bidding war,” Mr. Flexner told CO. “Full-page ads were taken out in the Journal. But Starwood was able to prevail.”

It was, in Mr. Sternlicht’s words, “a minnow-swallows-the-whale deal.” By the time Starwood made the offer, “we were roughly a $7 billion company buying a $14 billion company.” (The deal was paid for largely in stock.)

“So, Sheraton was based in New York; Westin was in Seattle; and Starwood Lodging was mostly in Phoenix—and they merged everybody to White Plains here,” Mr. Sternlicht said. “I had three of everything. Three CFOs. Three HR directors. I didn’t know what I was doing—but we had $9 billion of debt, so I had to learn fast.”

Some of this involved selling off the unwanted assets like Caesars.

Aside from Jackson, Steve Wynn had  wanted to purchase Caesars and made a $2.8 billion offer, which Mr. Sternlicht initially accepted. But the late-Arthur M. Goldberg’s Park Place Entertainment came in with a better one.

An infuriated Mr. Wynn demanded an audience with Mr. Sternlicht after he had heard that his offer had been passed over for Goldberg’s. “Steve was sitting in his office, with two German shepherds at his side… [He was] the color of a tomato he was so angry at me,” Mr. Sternlicht said. Former professional poker player, Bobby Baldwin, who was chief financial officer of Mr. Wynn’s Mirage Resorts, came into the room and whispered something into Mr. Wynn’s ear. Suddenly, Mr. Wynn decided to quietly back down. (Apparently Mirage forgot to factor in the corporate overhead when it made its $2.8 billion offer.)

As Mr. Sternlicht’s plane was about to take off from Las Vegas, one of Mr. Wynn’s lawyers was, according to Mr. Sternlicht, running down the runway, chasing down the plane to get a final signature from Mr. Sternlicht on the documents dissolving the initial agreement.

But the other part of the ITT purchase was opening up a great collection of hotels and taking it for a spin.

Mr. Sternlicht took one of the most luxurious properties in the portfolio, the St. Regis in New York City and asked why it had to be a standalone property? Why not create a whole chain of luxury hotels under the St. Regis label? So that is exactly what he did, replicating another St. Regis in San Francisco before moving on to other cities.

This began a particularly creative and expansive period; Mr. Sternlicht took the Doral Inn at 541 Lexington Avenue between East 49th and East 50th Streets and turned it into a boutique hotel geared toward a younger crowd—this was the first W Hotel.

All the while, he was still managing Starwood Capital, and in 2005, Mr. Sternlicht attempted to semi-withdraw from Starwood Hotels and act as a consultant and chairman of the board. He hired Steven Heyer to be CEO, but as Mr. Heyer attempted to make changes at the company, a public duel between Messrs. Sternlicht and Heyer played out. (Mr. Heyer was eventually forced out in 2007 because of what was described in the Journal as “personal misconduct.”)

Indeed, Mr. Sternlicht’s reputation for perfectionism (the “blade of grass” stuff Mr. LeFrak spoke about) oftentimes was translated in the press as “control freak.”

“In the hotel industry, he’s embarrassed a lot of people,” Ted Darnall, the former head of Starwood’s North American operations, told Portfolio magazine in 2007 regarding Mr. Sternlicht. “He had the vision and strategy that the so-called experts didn’t see or said wouldn’t work… That’s going to result in a lot of people wanting to see him fail.”

The way that Mr. Sternlicht has handled his public image is, in his own view, one of his failings.

“I was naïve,” Mr. Sternlicht told CO. “I thought you just post numbers, and that’s enough. But you have to manage your image almost as if it’s a person apart from you. Perception can be reality. I didn’t know that—I learned that later in my career.”

Even after exiting Starwood Hotels, Mr. Sternlicht was active in the hotel business. He kept pursuing projects, like the one at Mammoth Mountain. But he would be most tested, like everybody else in the business world, during the economic meltdown of 2008, and it’s where his status in the real estate world took on an even greater depth.

“It was clear that the world was ending,” Mr. Sternlicht said. “I was really worried about our pension capital…so I came up with the idea of raising a blind pool on the New York Stock Exchange.” The idea was to make real estate loans when nobody else would. A number of banks turned Mr. Sternlicht away until Deutsche Bank agreed to work with him on the initial public offering.

The thinking from his investors was, “If I could build a hotel company, I could build a mortgage company,” Mr. Sternlicht said. “A lot of old shareholders came into the deal. Maybe it was just a bet on us.”

Mr. Sternlicht hoped to raise $500 million but wound up raising $900 million.

“We could have raised over $1 billion,” Mr. Sternlicht said. “But the banks were reluctant to re-sticker and refile…Until November or December of that year, it was the largest [initial public offering] in the United States that year. And it was the largest blind pool ever raised on the New York Stock Exchange. And it was the third-largest REIT IPO in history.”

This company became Starwood Property Trust, the largest commercial mortgage REIT in the United States, which today owns the world’s largest commercial mortgage special servicer, LNR Partners.

If anything, pressure brings out Mr. Sternlicht’s best self.

“It’s actually easier when there’s a crisis, or when you’re not doing well than when you’re doing well,” Mr. Sternlicht said. “I think it’s human nature. Sometimes the worst comes out when you’re super-successful. Now you’re fighting about the pie—before there was no pie to fight about.”

For example, Starwood had bought Mammoth at the worst possible time in 2005. “We had a major drought [that year],” Mr. Gregory said. “The next year we had a major drought—but not as bad. The next year we had a global financial meltdown.”

The setbacks didn’t scare Mr. Sternlicht. In the darkest days of the recession, the discussions between Messrs. Gregory and Sternlicht were about positioning themselves for better times and not diluting their brand. Even after the economy seemed to be coming back, the droughts in California kept coming. At the most severe of the drought, in 2014, Mr. Gregory came to Mr. Sternlicht with what he called “a wingnut idea”—namely, to buy another California ski resort at Big Bear. (Nobody else at Mr. Gregory’s company thought this was a smart move.)

“Why on earth would you think of doubling down?” Mr. Sternlicht asked.

“Because it’s the opposite of what everybody else would do,” was the reply.

“That’s exactly right!” Mr. Sternlicht exclaimed.

Big Bear, a resort just an hour away from Los Angeles, proved to be a shrewd investment. “In the last year,” Mr. Gregory said, “we did $22 million [earnings before depreciation and amortization]—they were doing $2.5 million EBDA when we bought it.”

“The combined complex will make $75 million this year,” Mr. Sternlicht said. “Our investors should make an incremental $200 million because we held on…I’m really proud of us, proud of the management at Mammoth for executing their strategy so brilliantly.”

Mr. Sternlicht looks more animated than at any other point during the interview.

“It’s my dad originally telling me, ‘Do you want to look at a little, bitty screen for the rest of your life or look in the mirror and feel good about what you do every day?’” Mr. Sternlicht said. “I look in the mirror and feel really good about what we’ve done for the past 26 years.”

Just being born into one of New York City’s family-owned real estate firms does not guarantee you a spot in the C-suite.

At least, not at Rudin Management.

“You have to show passion and commitment and a desire to be in the business,” said William Rudin, the third-generation chief executive officer of the firm, whose children have taken on larger and larger roles in recent years. “It goes from there. You have to work for it and earn everybody’s confidence, show a commitment and work hard.”

Anything other than that, Rudin added, “would be irresponsible.”

Responsibility is one of those watchwords for those who have a kingdom to look after—which they likewise pass on to the next generation.

One of New York City real estate’s most fascinating aspects is the aristocratic underpinnings of its most powerful families. Real estate represents a kind of landed gentry in a country that never had nobility—and nobility (particularly issues of succession) has always been the stuff of literature.

The big names—Durst, Fisher, LeFrak—have their own family sagas, their own courts, their own vassals and serfs. And they always have a new generation of princelings at the helm.

Patricia Angus, an adjunct professor at Columbia Business School who teaches a class on family enterprise and wealth and has been instrumental in creating a family business program there, said family members need to be frank about the strengths and weaknesses of heirs before assigning them roles.

“A business always deserves to be run by the most capable and qualified people—whether family or not,” Angus said. “If a family member is not qualified, it should not be assumed that they will become a manager of the family business. That is not good for the business, or the family. If a family member has a problem with excessive spending, the family needs to think about the root causes. Is there a mental health issue? Substance abuse? Some other explanation for the spending? And, what can be done about it? Making sure that all family members live healthy, productive lives is a top priority for almost all families. During the estate planning process, it is important to have honest discussions of these issues.”

Winston Fisher, a third-generation principal at Fisher Brothers, said his father, Richard Fisher, told him he had to work outside of the company before joining the family firm.

“He was like, ‘Listen you cannot work here,’ ” Winston, 43, said. “‘You have to work outside of the company. You cannot come in here as a family member with no experience. When you walk through this door, your last name is not Fisher. When you walk through this door, you are a worker, and you are going to behave like a worker…If you can’t do it, you’re out.’ ”

Winston’s cousin, Kenneth Fisher, a company principal, added, “Also there was no revolving door. Don’t ever come in and spend a couple years here and say, ‘You know what, I’m gonna go try something else, but I’ll be back in two years.’ That’s not the way it worked either. If you left, you left.”

For many scions of these New York City real estate empires, seeds were planted when they were still in high school around the dinner table.

“My father and grandfather would be arguing at one side of the table, and my grandmother would be trying to avert our attention away from it,” said Eric Gural, a co-CEO of Newmark Holdings and son of the company’s chairman, Jeffrey Gural. “I wanted to know what they were arguing about and who was right.”

In the Gural family’s case, the arguments were usually about Jeffrey acquiring a lot of property, and Jeffrey’s father, Aaron, “generally warning him against the risks,” Eric said. “My dad and Barry [Gosin, his business partner,] were a bit more bullish than my grandfather who was more concerned about the cost of purchasing all these properties, but looking back my dad was right. However, it showed that my grandfather cared a great deal about what was happening to the business.”

Eric, 48, got his entrée to the business working at Newmark Holdings’ portfolio buildings as a porter and freight operator during summers off from high school. (The company portfolio spans about 10 million square feet.) This summer, Eric’s 18-year-old son, Ethan, is working at the company for a month, operating the elevators at Newmark Holdings’ 247 West 37th Street.

Eric’s cousin and co-CEO, Brian Steinwurtzel, started at Newmark Holdings as an intern over the summer at age 16, collecting rent at 318 West 39th Street and 247 West 37th Street.

“Anyone who has an interest, we want them to have an opportunity to see what we do,” Steinwurtzel said.

To that end, all family members have to do a stint as a leasing agent, an asset manager, a property manager and do a little bit of work on the legal end “so we get a good sense of what each other does,” Steinwurtzel, 39, said. Even Anny Pahl, the company’s general counsel and Jeffrey Gural’s niece, circulated through all of the jobs.

This is fairly typical, according to Elisa Balabram, who has been teaching family business management courses at Zicklin School of Business at Baruch College since 2013.

Company heads groom the next generations by “providing internship opportunities, summer jobs, teaching them financial responsibility, showing them how the business works and once they choose to join the business, allowing them to start with an entry-level position, and grow over time and by mentoring them into becoming the next leaders. It is crucial to encourage next generation family members to work elsewhere, to gain experience and build their credibility, and to allow them to choose or not to join the business later on.”

Justin Elghanayan, who is the president of Rockrose Development Corp., described the wooing into the family business after a stint as a teacher this way:

“I did talk to [my father] a lot about business,” Elghanayan, 38, said. “But he really didn’t pressure me. It was more like a long, slow seduction. And when I tried it, it was just really fun and really interesting. Then I spent several years at the beginning with the company working in different roles in the company, sort of from the bottom up [before] taking on a more executive role. It got to be even more fun because I got to do more creative things—like what we’re doing in [the] Court Square [neighborhood of Queens] requires some creative thinking where we’re developing 2,500 units of housing.”

William Rudin (now 61) would tag along with his father, uncle and grandfather at construction sites “as early as 4 years old” and would frequent the company headquarters at 415 Madison Avenue.

When he was coming-of-age, his grandfather, the late Samuel Rudin, made William an interesting offer.

“He wanted all of his grandchildren to come into the business,” William said. “He said to me, ‘Don’t go to college. Put a chair in my office, and you’ll learn more in a month than in a couple years in college.’ ”

William turned down the opportunity, and his grandfather passed away while he was in school.

“I sort of regret not taking advantage of that opportunity,” William said.

William’s children, who are executives at Rudin Management, started learning about and working at the company early on.

“In 2007, a year after graduating from college, I didn’t put my desk in my dad’s office, but I sat in the office of our chief operating officer, John Gilbert, and started there and was included and invited to every meeting and just started to learn how the business worked,” said Samantha Rudin Earls, 32, a company vice president.

Her brother, Michael Rudin, (now 31 and a vice president at the company) did the same thing in high school.

“I took a semester off from school and basically shadowed our father, and like Sammy did a few years later, my desk was in our chief operating officer’s office,” Michael said.

For the senior members of the family, it is understandable that they would want to pass the business on to their heirs—but the pressure to join the business is nowhere near as widespread as it once was.

Richard LeFrak, who is turning 71 on Aug. 29 and the third-generation chairman and CEO of LeFrak, told Commercial Observer he felt pressure to join the family business—but the same rules don’t apply to his kids.

The general consensus among all the families contacted by CO was that the younger generation can do as they wish—but they know they can always join the family business if they want to.

“You want your kids to follow in your footsteps—of course, you do,” said Kenneth Fisher, 58. His daughter Crystal Fisher, 35, has done some work for the company, and he has a 22-year-old daughter and a 20-year-old son, both of whom are in college. “But at the end of the day, I want happy kids. I don’t want kids that go to work every day and have trouble getting dressed because they don’t want to come in because they don’t like what they’re doing. So the most important thing is groom them if they want to be groomed.”

“I struggled with whether I liked real estate because I grew up in the business—or whether I liked it because I would have liked it regardless,” said Andrea Olshan, 36, the CEO of Olshan Properties, the New York City-based real estate empire of approximately 24 million square feet spread over 11 states, which was started by her father, Mort, who is now the company’s chairman. “Ultimately, I came to realize it’s probably both.”

Olshan added, “My mother actually always thought I would make a great attorney and probably still wishes I had gone to law school.”

In some families, there’s an impulse from the younger members to strike out on their own—within the real estate business or not—to establish their bona fides.

That’s what Jonathan Iger, the 34-year-old, newly minted CEO of William Kaufman Organization, did until 2010. He was working at a Washington, D.C., real estate boutique investment firm when his late grandfather, Robert Kaufman, who was 83 at the time, approached him.

“Robert was ramping up for a new cycle,” said Iger, the fourth-generation company head who was thrust into the role after Kaufman died early this year. “That’s partially why I came aboard.”

At The Durst Organization, family members interested in the business have to start as an unpaid intern for two years, working “in all of the various departments including a stint in the engine room, management office, in leasing, on the financial end, so they understand everything that goes on here,” said Douglas Durst, the chairman and a third-generation leader of the company.

Content with working at Diesel Construction, Jeffrey Gural had no interest in going into the family business.

“My father and his partners had been bugging me for a couple of years to leave Diesel and come to work there,” Gural said. “I was the only one of the children of the partners who could really do it.”

But when Diesel Construction was sold to ARA Services, Gural didn’t want to work for a public company, so he decided to try out the family business. (In a stroke of irony, Newmark Grubb Knight Frank, where Gural is chairman, was sold to BGC Partners—a public company.)

“I’m a civil engineer. My real love has always been construction,” Gural said. “[But] I don’t regret it at all obviously, especially now. These buildings are worth so much money.”

For many successful real estate families, it has been paramount to have clearly outlined job descriptions.

“It is important to determine the roles and responsibilities of the family members involved in the business, to establish rules to determine who can join the business, to have governance in place—family council, family meetings, board of directors with independent members, a family constitution, to name a few—and to be crystal clear on the family values, vision and goals,” Balabram, the Baruch professor, said in an email.

Lessons about division of labor can sometimes be learned the hard way.

“My father and I used to fight all of the time,” Jeffrey Gural noted. “Finally, we came up with an ideal plan. He would oversee certain buildings, and I would oversee certain buildings. And we never fought again.”

Steinwurtzel and Eric Gural “determine who has the best skill set for each project and the time [to do it],” Steinwertzel said.

For buildings that require a lot of leasing, Eric Gural handles the job. If they are heavy on financing, Steinwurtzel takes them.

At Durst, the job descriptions are inherent in the titles: Douglas Durst is the chairman; his cousin Jody Durst is the president; Douglas’ son Alexander Durst is the chief development officer; Douglas’ daughter Helena Durst is the chief administrative officer; his cousin Kristoffer Durst is the chief information officer; his niece’s husband David Neil is the chief leasing administrative and legal services officer; and Jody’s son Lucas Durst is a project associate in the leasing department.

‘The odds of a family business succeeding into a third generation is a rare happening…third-generation heirs are raised in a very different environment and [have] a lack of shared common goals or outlook for the future.’
—James Olan Hutcheson

Richard LeFrak runs the eponymous firm with his sons James LeFrak, 42, and Harrison LeFrak, 44, both vice chairmen and managing directors. Harrison handles the family’s Florida portfolio and is “very adept at finance, [so] he does a lot of the family investing,” Richard said; James focuses on construction, development issues and handles the California properties.

At the end of the day, Richard added, no one is forced to do anything.

“The responsibility is taken; it’s not given,” he said. “It’s a family business. If someone wants to work on something, they do.”

Justin Elghanayan is responsible for construction, development, residential acquisitions and neighborhood building at Rockrose; his dad handles finance and commercial acquisitions.

“I think it’s a really good way to organize any partnership, but particularly for an inter-generational partnership I think it works really well,” Elghanayan said.

As with other types of businesses, there are merits to working at the family company, as there are potential pitfalls.

“The pros of working in the family business include not having to start a career from scratch and benefitting from the success and reputation already in place,” said Sally Jennings, who teaches a course at New York University School of Professional Studies in real estate family business management. “If there is naturally a strong relationship between family members or at least shared respect, the bond can increase. The cons are frustration due to lack of ability or interest from successive generations; inability to work well with family members; and radically different management styles that turnoff other employees.”

For Jennings, teaching a course at NYU was personal. She is the second-generation president of Realty Capital International, a real estate investment banking and advisory firm.

“My idea to teach a course at New York University in real estate family business management stems from my own experience and desire to help successive generations avoid the pitfalls of joining a family business,” Jennings said. “There are special considerations for a family business including estate planning, accounting, legal and psychological factors that will all determine the success or failure of the business.”

Those issues are not always easy to sort out. That is why Angus from Columbia University established Angus Advisory Group. As a consultant, she works with families who have multigenerational businesses, trusts and wealth and helps them work together across generations to understand what they own, how they own and how to think strategically.

“Real estate families are really interesting,” Angus said. “In part they’re interesting because of the nature of real estate itself. It’s this very tangible asset that lasts longer than human beings and is often co-owned through family members through structures and often among multiple families.”

The main issues she has worked on with half a dozen real estate families are how do members work together, how to avoid conflicts, understand estate plans and legal structures and ensure they are still running a productive business. In addition, she helps sort out when someone from outside the family should be tapped to manage it.

“That may involve some family members being involved as overseer. Others may be shareholders; others may be bought out,” she said.

Having a family business that gets successfully passed down from generation to generation is actually uncommon.

Only about 44 percent of family firms make it into the second generation as a family business, 10 percent will succeed into a third generation and about 4 percent into a fourth generation, according to James Olan Hutcheson, the president and founder of family business consulting firm ReGENERATION Partners. “The odds of a family business succeeding into a third generation is a rare happening,” he said. “[There are] many reasons for this, but primary among the reasons are that third-generation heirs are raised in a very different environment and [have] a lack of shared common goals or outlook for the future.”

One real estate family that famously split was the Elghanayans. Brothers Henry, Thomas and Fredrick Elghanayan founded Rockrose Development in 1970 but parted ways in 2009 with Henry, the eldest, retaining Rockrose and the two others launching TF Cornerstone.

The Real Deal reported that the Elghanayan brothers split over differences about a succession plan. “There’s some tension, but if you think of all the divisions that have happened in the real estate industry, this was a rather smooth one,” Henry Elghanayan told the publication.

“The concept was in the long term, there were probably going to be so many people and so many personalities involved,” Justin Elghanayan, the junior partner and heir apparent at Rockrose recently, told CO. (Justin Elghanayan has two other brothers—Adam and Ben—neither of whom are in real estate.) “We saw what happened to family businesses, and it can create conflict. We didn’t want that to happen. I really like my cousins. We thought it was cleaner to do it this way.”

It can be challenging for senior members of a clan to retire and not micromanage the succeeding generations.

“A lot of these people are deal junkies,” said Barry Hersh, a clinical associate professor at the NYU Schack Institute of Real Estate. “The question is, When are they willing to let go?”

“My father, when he was alive, obviously he was in charge of certain things,” said Winston Fisher, “but he was able to let go of the reins and pass things on at the same time. They encouraged the second and third generations to have their own voice. Kenny, Steven and I manage the company differently and do different investments than the second generation. We’re different and so we have core philosophies that are passed down but we are looking at different things than they did. And that’s okay.”

The secret sauce of present-day Newmark Holdings, Jeffrey Gural said, is letting his son and nephew run the business.

“Fortunately for them, I really am focused on my racetracks and casinos and my nonprofit boards,” Gural said. “I don’t know what would happen if I didn’t have [them].”

With additional reporting provided by Terence Cullen.

In 2016, a lot of Americans—including your mild-mannered Commercial Observer editor—have gone poll crazy.

We’ve got a national election weeks away, so it’s only natural to check FiveThirtyEight, The Upshot and Real Clear Politics poll trackers six or seven times a day, right?

For a busy person, this is unquestionably a waste of time. If you check the polls in the morning, you pretty much know where the race stands in the evening. And even if there are some devastating new numbers, does finding out about them at 3 p.m. on Monday really help your side more than if you found out at 9 a.m. on Tuesday?

But more than just keeping us apprised of the horse race, I think there’s another reason polling has been such a big topic this year: America has something on its mind. The polling data is the best way to try to piece it together.

CO’s Owners Magazine can be viewed as its own kind of polling of the real estate industry—but in an extremely targeted and unscientific way.

We asked the same questions to 38 of the biggest owners in New York City (many of whom own property well beyond the Empire State) and compiled what they had to say in these pages.

For the most part, we asked questions we felt owners could have enough room to opine on: Is there a bubble in the hotel sector? What underdeveloped markets excited them? What do they think the Brexit vote will do for New York real estate? And (naturally) who are they supporting for president?

Some of our questions proved to be duds. We were hoping for a provocative answer to “Who’s to blame for the 421a debacle?” but almost nobody took our bait. Terence Cullen attempted his own answer in his story on page 8.

But we also got a strong sense of the shift that has occurred in the market over the last 12 months. We asked whether they were buying, selling or holding, and the most common answer by far was “Hold!” Readers from all sectors of real estate should take note of that.

Of course, we didn’t intend to just regurgitate whatever the owners fed us. We tried to include stories about ownership, too. Lauren Elkies Schram reported on New York’s owners like the city, or NYU—whose business is not primarily real estate—and how they manage their portfolios. Liam La Guerre took a hard look at the city’s Minority and Women-Owned Business Enterprise (MWBE) program and where they’re falling short. Danielle Balbi culled the data from some of the biggest owners who didn’t fill out our survey and asked who was financing their projects (page 100).

All in all, we view this magazine as a valuable trove of data. This is what is on the minds of the city’s developers and landlords. Now, if you’ll excuse me, I haven’t refreshed FiveThirtyEight in a good 20 minutes…

Not to get too Inside the Actors Studio on our owners, but one of the questions we felt compelled to ask was, “If you weren’t in real estate, what would you do?”

Unlike the Manichean either/or of our lightning round, or the analytical questions about 421a and WeWork, each response suggests something deeper (and more personal) about our owners. Suddenly, there are all sorts of fates that could have been. We get a glimpse at who Nicholas Bienstock of Savanna and Jeff Levine of Douglaston Development are when they go home at night (writer and rabbi, respectively). Each fantasy life promises to be completely different from their real life.

Or so we thought. Not that it should come as such a surprise, but the most common what-if fantasy for these men and women was real estate. (So much for indulging in fantasy.)

“Never thought about it,” said Richard LeFrak of LeFrak. “Being a developer is my whole life.”

“I would miss [it],” replied Tommy Craig of Hines. “It’s too late to change now, though.”

“Well, since I’ve only been at it for 60 years, it’s hard for me to think of any alternative,” said Silverstein Properties’ Larry Silverstein.

“Real estate,” answered Isaac Chera of Crown Acquisitions, simply.

We’re glad there are at least no regrets. But there were a few owners who let us in on their life beyond just brick and mortar.

“I’d be a spokesmodel,” said Douglas Durst of the Durst Organization. (We thought he was kidding, but when we asked a representative if his boss really wanted to be a supermodel, the reply was, “Spokesmodel. It’s different.”)

“I would train thoroughbred horses,” Marc Holliday of SL Green Realty Corp. told CO. “Apart from my role at SL Green, I am a horse owner, breeder and a big fan of racing.”

Holliday is not the only horse owner amongst the landlords. “I own a couple of racetracks and horse farms,” said Jeffrey Gural of Newmark Grubb Knight Frank, “but my first love was really construction. I have a degree in civil engineering, and if I wasn’t in real estate, I would be in construction.”

Both Robert Lapidus of L&L Holding Company and David Zar of Zar Property NY would go into the rock-and-roll business.

Some of these owners are already active in a second life. Charles S. Cohen, for instance, is an extremely successful movie producer (his film Hitchcock/Truffaut was screened at Cannes last year). And apparently Jared Kushner’s second life as a publisher (of CO and the Observer) and political insider is not all there is—when Kushner was asked the question he responded, “Chef.”

If you build it, they will come.

Sure, that’s the line ambitious developers will often use when trying to get a project off the ground. When it comes to New York City’s infrastructure, however, experts believe that you have to rebuild it, because so many people have already come and public works have fallen apart.

And this might be the Big Apple’s golden opportunity to get a big injection of cash, courtesy of the federal government. Yes, it’s not even two weeks in and President Donald Trump is sparring with nearly everyone over almost everything under the sun… except a big infrastructure plan that would provide billions in public works.

Trump made that a key policy proposal on the campaign trail, many crediting it as a factor for his surprise victory in November 2016. He’s gone as far as tapping real estate pals Steven Roth of Vornado Realty Trust and Richard LeFrak of LeFrak to head his task force on infrastructure.

Senate Democrats, who have pushed for infrastructure investment in the last few years, unveiled a $1 trillion spending plan last week to get the ball rolling on construction of new roads, bridges and transportation hubs.

“Nationwide, you’re looking at 10 [million] to 20 million new jobs,” said Carlo Scissura, the president and chief executive officer of the New York Building Congress. “These projects, which won’t get off the ground tomorrow, will create a million new jobs in the New York region over the next 10 to 20 years.”

And the construction industry appears ready to roll up its sleeves. “The development and maintenance of infrastructure is critical to improving the lives of all New Yorkers,” said Mike Viggiano, a Skanska USA executive specializing in infrastructure. “Our roads, bridges, tunnels and mass transportation systems serve as the backbone for commerce.”

Commercial Observer reached out to some of the city’s top experts on constructing or rebuilding these types of projects to gauge what they’d like New York to get from a major, hypothetical, spending package and three key projects kept coming up again and again.

Gateway Tunnel

A long-standing proposal that didn’t get much attention until last year, the Gateway Tunnel is becoming a reality. The project is expected to cost $20 billion, half of which the federal government is expected to pay. Local governments from both states and agencies such as the Port Authority of New York & New Jersey will foot the other $10 billion and have begun drawing up financing plans.

Amtrak, which controls the existing tunnel, would then be able to shut down the crumbling tube, which was heavily damaged by Superstorm Sandy. The current passageway already sees a heavy amount of use from Amtrak, NJ Transit and other lines.

“Obviously the Gateway Tunnel is something that is a priority for New York,” said Gary LaBarbera, the president of the Building and Construction Trades Council of Greater New York. “That’s something that’s desperately needed.”

Experts told Commercial Observer the work would likely be done by larger, international construction companies. There’s also the option of going through a public-private partnership, in which a nongovernmental entity invests and builds the tunnel.

The Trump administration put the Gateway Tunnel as one of its 50 top infrastructure investment priorities. Elaine Chao, Trump’s secretary of transportation, said at a senate hearing last month that constructing Gateway Tunnel was a key need moving forward.

“I would assume that any project in New York, New Jersey would be very important going into the future,” she told members of the Senate’s Environment and Public Works Committee.

Tom Wright, the president of the Regional Plan Association think tank, said he supports Gateway but added the tunnel could go a step further. If the Feds were to invest in the tunnel, he said, they should explore extending it through Manhattan, under the East River and directly to the Sunnyside rail yard in Queens.

“Everyone has collectively recognized that Gateway by far should be at the top of the list. In size, impact and national importance it is probably the most important project in the country.”—Chris Ward, AECOM

Gowanus Expressway

If your regular commute involves going from northern Brooklyn to Staten Island, chances are you’ve lost hours of your life in stop-and-go traffic.

Some transportation and infrastructure advocates believe the best solution is to replace the Gowanus Expressway, which runs in Brooklyn from the Verrazano Bridge in Bay Ridge to the Red Hook section of the borough.

In 1997, RPA published a study that found it was feasible to rip down the roadway, built in the 1940s, and put a tunnel in its place. Taking down the expressway would disrupt the impacted communities, according to the report, but would open up access to neighborhoods such as Red Hook and Sunset Park.

However, in 2011 the Federal Highway Administration scuttled dreams of tearing down the Gowanus and burying it below Third Avenue because the costs would be too high.

But some believe now is the time to revive the plan since infrastructure talks are on the table. Scissura, the head of the Building Congress, said replacing the Gowanus would open up Brooklyn neighborhoods that have already experienced a wave of development. If Boston could have a highway underground, then New York should have the capability to do it too, he added.

Of course, there’s the matter of cost, which Scissura said could be about $20 billion. While the cost equals what it would to build 1 World Trade Center five times over, the Building Congress chief said that it’s merely a drop in the government’s potential bucket.

“We’re at a moment where every side in Washington wants to spend $1 trillion on infrastructure,” he said. “If we’re going to spend it, and now is the moment, then New York needs to seize on it. New York needs to be the beneficiary.”

“This has been talked about for 20 years. If we actually tore down the expressway, built a tunnel connecting the Verrazano Bridge to the Battery Tunnel to the [Brooklyn-Queens Expressway], you would open up so much opportunity for millions of people, alleviate traffic and build a modern system.”—Carlo Scissura, New York Building Congress

The Airports

If you’ve been in a coma since the 1960s, the only things that’ll look the same in New York City when you wake up are the airports. And, unsurprisingly, many experts said LaGuardia Airport and John F. Kennedy International Airport rank as two of the worst in the country.

But these mavens of construction and infrastructure noted that a lot of work has been undertaken at the state level already. In fact, Gov. Andrew Cuomo has announced about $18 billion in construction work between the two airports since July 2015. That includes construction of an entirely new, larger LaGuardia Airport and a $10 billion overhaul of JFK to upgrade facilities as well as make access to the airport better.

Where the Feds could help out is finding a way to create more one-seat rides to the airport, said William Rudin, the chief executive officer of Rudin Management Company and the chairman of The Real Estate Roundtable trade group. He said figuring out a direct route from Newark Airport in New Jersey to Lower Manhattan or a one-seat link from the island to JFK would be major infrastructure victories.

Joseph Sitt, the founder of Thor Equities and the chairman of infrastructure advocacy group Global Gateway Alliance, noted that the tri-state region’s airports currently employ 500,000 people. Upgrading the airports even more would create jobs in both the short and long run, he said.

“No place is as dependent on our subways, trains, buses and airports as we are, and without good infrastructure our city’s economy literally can’t function,” Sitt said. “That’s why the crumbling infrastructure we’ve been dealing with has cost so many billions of dollars, and that’s why we need to rebuild now.”

“We must improve the New York region’s aging airport terminals and expand the capacity of LaGuardia, Kennedy and Newark airports to reduce the delays that plague our system and cost billions in lost time and productivity.”—Joseph Sitt, Thor Equities

A week after claiming he doesn’t have much control over the Metropolitan Transportation Authority, Governor Andrew Cuomo gave a speech in which he reiterated the need to upgrade Pennsylvania Station and challenged the MTA to fix New York City’s aging subway system.

During his address at the CUNY Graduate Center, Cuomo touted his public-private plan to revamp James A. Farley Post Office into Moynihan Station, while lamenting the impending chaos that will occur when Amtrak slashes train service for six weeks this summer in order to make repairs. He announced the creation of a task force to address the impending “summer of hell,” which would focus largely on solutions that affect suburban commuters, like high-speed Long Island ferries and privately owned bus service.

“The intolerable state of disrepair in Penn Station and its ripple effect of delays and dysfunction throughout the subway system have reached a breaking point, and we must enact this comprehensive action plan now to find both short and long term solutions to these growing challenges, upgrade outdated infrastructure and meet the needs of current and future generations of New Yorkers,” Cuomo said.

The Penn Station task force will have some familiar faces, including Richard LeFrak, chief executive officer of LeFrak, and Steven Roth, chairman of Vornado Realty Trust (both members of President Donald Trump’s infrastructure panel and longtime Trump friends), Congressman Peter King, Tom Wright of the Regional Plan Association, and former New York City Planning Commissioner Carl Weisbrod.

Of course, Vornado is part of the team already chosen by the governor to redevelop the Farley Post Office. The corporation also controls nine million square feet of office space around Penn Station.

The governor’s 143-slide presentation and speech highlighted the fact that revamping Penn Station, constructing the cross-Hudson Gateway Tunnel and converting the post office into a new train hall would be an ideal project for Trump’s trillion-dollar infrastructure plan. The entreaties came only a few days after Cuomo penned a letter to Trump, requesting emergency federal funding to help with short-term repairs and a longer-term rebuilding of Penn Station.

Cuomo also proposed that Amtrak and the federal government should transfer control of the beleaguered station to one of three entities: New York State, the Port Authority of New York and New Jersey, or a private “qualified” contractor. Meanwhile, Amtrak Chief Executive Officer Wick Moorman said the rail operator has no plans to cede control of Penn, telling The New York Post’s editorial board earlier this week: “Our name is on the deed.”

Then Cuomo switched gears to the subway system. The 112-year-old hodgepodge of train lines has had several major meltdowns in the past two months, sparking a torrent of negative press and angry editorials directed at the governor, who controls the MTA, the agency that runs the subways, the Long Island Railroad and the Metro North trains.

“The truth is that the subway system is already at its breaking point and now trying to compensate for the dysfunction of Penn is just too much,” he said. “We have 64,000 delays per month.”

The governor announced an “MTA Genius Transit Challenge,” which would solicit proposals to replace the subway’s early 20th-century signal system, refurbish aging subway cars, and design technology that will improve wifi and cell signals in stations and tunnels.

A changing of the guard is a good moment for reflection. Last June, it was announced that Rob Speyer would be stepping down as chairman of the Real Estate Board of New York and be replaced by Bill Rudin.

Speyer got the job in 2013, five years and a bizarro world ago—and that crack isn’t strictly about the national political scene.

New York City is a different place than it was under the beginning of the Speyer regime. Michael Bloomberg was mayor. Steven Spinola was the long-serving president of REBNY. Sheldon Silver was the Speaker of the New York State Assembly. Nobody had heard of WeWork.

Different, right?

We spoke with Rudin and asked what his plans were for the organization.

Liam La Guerre looks at the various milestones in the Speyer presidency, from tapping John Banks to become Spinola’s replacement, to helping steer the city into the next incarnation of its 421a program, Affordable New York.

Speaking of Affordable New York, it has been one of the things that the 122-year-old trade organization has lobbied most fiercely for, and now that a year has passed since the new legislation has been signed into law, Aaron Short explores how the program has been panning out.

Of course, REBNY is not an organization that is strictly defined by the laws it advocates. It is also a presence in the courtroom. Lauren Elkies Schram examines the six legal cases that the trade organization has lent its legal expertise to over the last year.

One of REBNY’s big victories of last year was the fact that the City Council tore up the commercial rent tax for businesses whose rents are less than $500,000 per year, which Matt Grossman reports on.

An organization like REBNY will no doubt  be facing unforeseen questions and problems including a booming population and a razor thin vacancy rate; so if they’ll pardon a little persnickety advice on our part, Rebecca Baird-Remba examines at the issues that will be on the horizon.

Baird-Remba also got a look at the board’s annual report, the highlights of which we reported here.

Of course, not everybody is in love with the board. Rey Mashayekhi looked at its most persistent critic, labor advocate Ray Rogers.

REBNY, and the industry it champions is all about data. Mashayekhi found out where, physically, the old archived data is being housed (LaGuardia Community College, as it turns out).

Finally, our yearly REBNY issue also delves into who is being honored this year and why. The honorees at this year’s banquet include Rudin Management’s Gene Boniberger; Richard LeFrak; Cushman & Wakefield’s Ron Lo Russo; C&W’s Joanne Podell; U.S. Senator Charles Schumer; outgoing president Speyer; and Stribling & Associates’ Elizabeth Stribling.

—Max Gross

Despite a tumultuous year for real estate—with investment sales falling off a cliff, retail suffering due to e-commerce and banks tightening their lending—it was a night full of splendor, high spirits and big names at the Real Estate Board of New York’s gala yesterday.

The 122nd annual REBNY banquet at the New York Hilton Midtown at 1335 Avenue of the Americas featured a power-packed list of politicians, developers, brokers, bankers and other professionals. Many in the room expressed optimism for 2018 to Commercial Observer.

“It’s a great time to celebrate the industry,” REBNY President John Banks told CO, without giving further explanation.

However, Bruce Mosler, the chairman of global brokerage of Cushman & Wakefield, later expounded that economic factors are positive and things seem to be looking up for 2018.

“I’m not worried about macroeconomic risk, I’m more concerned about geopolitical risk,” Mosler said.

While nearly 2,000 partygoers hobnobbed at the cocktail hour before the award presentation, members from the Campaign to Stop REBNY Bullies rallied in front of the hotel against the trade organization.

Top pols that graced the event included Mayor Bill De Blasio, recently minted for his second term, Attorney General Eric Schneiderman, New York City Comptroller Scott Stringer, Bronx Borough President Rubén Díaz Jr. and Brooklyn Borough President Eric Adams. Meanwhile, some of the real estate community’s brightest stars in attendance included RXR Realty’s Scott Rechler, Extell Development Company’s Gary Barnett, Durst Organization’s Douglas Durst, C&W’s John Santora, CBRE’s Mary Ann Tighe (a former REBNY chairman), L&L MAG’s MaryAnne Gilmartin and Robert Lapidus (also of L&L Holding Company), Avison Young’s A. Mitti Liebersohn, Newmark Knight Frank’s Barry Gosin, former REBNY President Steven Spinola, and new REBNY Chairman William Rudin, the CEO and co-chairman of Rudin Management Company.

United States Senator of New York Chuck Schumer, the only politician being honored with the award last night, was busy in Washington, D.C., with Congress trying to pass a spending bill to avoid a government shutdown. (He earned the John E. Zuccotti Public Service Award.)

Tishman Speyer President and Chief Executive Officer Rob Speyer, REBNY chairman until December 2017, was the recipient of the Harry B. Helmsley Distinguished New Yorker Award. LeFrak Organization CEO and Chairman Richard LeFrak was presented the Kenneth R. Gerrety Humanitarian Award.

Joanne Podell, an executive vice chairman at C&W, earned the Louis Smadbeck Memorial Broker Recognition Award. Rudin Management Company Senior Vice President Gene Boniberger was honored with the George M. Brooker Management Executive of the Year Award. Ron Lo Russo, the president of C&W’s agency consulting group, won the Young Real Estate Professional of the Year Award.  

And Elizabeth Stribling, chairman of Stribling & Associates, received the Bernard H. Mendik Lifetime Leadership in Real Estate Award. In her speech, Stribling recalled having known Mendik and what it was like attending the REBNY banquet for the first time.

“It was exactly 50 years ago tonight that I first attended my first REBNY gala as a 21-year-old rookie broker,” she said. “I was starstruck. And I still am.”

When interviewing Jeff Blau, the CEO of Related Companies, for this year’s Power 100 we asked a question Commercial Observer had never raised in the past:

Who do you think should be No. 1 on our list?

To revamp the old saw that every time a senator looks in the mirror they see a president, we imagine that every time a developer is asked his or her position in the real estate pecking order the only number they recognize is “one.” (Blau—along with Stephen Ross and Bruce Beal—got the nod himself last year.) However, if they took themselves out of the equation, who should be No. 1?

“You should pick Google,” Blau said. “They’re doing more real estate than anybody. You put Google on, everybody will say, ‘Holy shit!’ ”

Google’s $2.4 billion purchase of Chelsea Market in February was the third-largest single-building office transaction ever in New York City history—and the buy also said something even subtler about the future of the city. As Gotham jockeys to be named the new East Coast headquarters of Amazon with 19 other cities, this was a remarkable vote of confidence in this city. It said something about where the newer, techier, younger workforce wants to be.

The other thing the Google real estate purchase proved was that while many real estate players regularly say that real estate is in a holding pattern, or that we’re in “extra-innings” in an interminably long market cycle, there are players who are taking the initiative and not shying away from big things.

And that was one of the most important characteristics of those who rose in our estimation this year—they didn’t shy away from thinking big.

Brookfield Property Partners’ Ric Clark was No. 8 last year, but the company seemed unusually peckish this year; not only was it wading into multifamily with The Eugene at Manhattan West and Greenpoint Landing with the Park Tower Group in Brooklyn; not only was it leasing millions of square feet of space (like, say, EY taking 600,000 square feet at 1 Manhattan West, or Amazon taking 305,000 square feet at 5 Manhattan West); not only was it making big trades (a $2.21 billion sale of 245 Park Avenue to HNA) but after a first rebuffed attempt it managed to acquire GGP, itself one of the country’s heavyweight REITs.

Some of the heavy hitters didn’t have much room to go any higher. RXR Realty was tapped—along with Vantage Airport Group—to lead the multibillion-dollar expansion of the JetBlue terminal at John F. Kennedy Airport. Normally, this is the kind of deal that could send a developer into the top five. Unfortunately, RXR CEO and Chairman Scott Rechler was No. 4 last year, so there wasn’t a lot of room for improvement. (He’s No. 4 again.)

Silverstein Properties has always had a fairly high ranking in Power 100, but with its winning $1 billion-plus bid for the Upper West Side ABC campus it merited a spot in the top 10.

Every year publicists, landlords and brokers call Commercial Observer and ask two things: Where are they on the list? (We keep that strictly under wraps.) And what’s our methodology?

Our methodology is never going to satisfy everybody. (A “popularity contest” is how one publicist dismissed it when I tried to walk him through it.) How does one compare a landlord with a broker? It’s a difficult question. If the broker disappears from the deal, can he be replaced? Sure. But if a landlord has a great piece of real estate and nobody believes in the project or the neighborhood or the transportation, will it go empty? Sure again. Who’s more powerful? The answer is that it depends. CO’s editorial staff spent many hours wading through these questions, assigning spots on the list and trying to provide answers to questions like, “Is Google—a tech company—really a real estate powerhouse?”

Answer: Absolutely.—Max Gross

Donald Trump may enjoy the support of a handful of his former peers among the New York City real estate club. (Here’s looking at you, Steven Roth and Richard LeFrak). But count Barry Sternlicht out, thank you very much.

Although Sternlicht has been a friend and golf buddy to The Donald, the Starwood Capital Group founder and chairman spoke disdainfully of the president at an industry forum dedicated to real estate investment trusts hosted by New York University‘s Schack Institute of Real Estate.

“Some of it is rational, but a broken clock is right twice a day, and that’s about the right strike zone for him,” Sternlicht said of Trump’s policy judgement.

As would befit the leader of a real estate company with more than $60 billion under management, Sternlicht stuck to throwing darts at the money sense of his old friend’s White House. It was rich material: The two-year-old Trump administration has borne no shortage of unorthodox developments in economic policy. (Viz. the president’s unusually aggressive trade stance and his vocal frustration with his own hand-picked Federal Reserve chairman, Jerome Powell—including thoughts of trying to replace him as Axios reported this week.)

But to Sternlicht, Trump’s most downright unusual tug on the economy’s reins came with the 2017 tax reform law.

“I didn’t really understand how we could come up with a $300 billion stimulus package on top of an economy that was already moving when Republicans got into office” in 2016, Sternlicht said. “Remember that with the collapse of the financial system [in 2008], the first [stimulus] package was $800 billion, and we had a 10 percent unemployment rate.”

Today, with the proportion of frustrated job-seekers below 4 percent, large-scale stimulus presents a serious inflationary danger, Sternlich warned.

“This was a serious morphine injection into an already moving economy. If the economy wasn’t popping now, we would be in serious trouble,” he said

But on other policy topics, the global investor praised the president, declaring his appreciation for Trump’s willingness to wage a trade war against China.

“The fight in China is a worthy fight,” Sternlicht said. “I’ve owned a company that had 50 percent import taxes on [bringing] its goods into China. [The U.S.] just doesn’t do that to companies.”

Even if Republican lawmakers have taken a retrenchment stance towards international trade, however, some of Starwood’s most promising work has come offshore of late.

“We recently bought assets in Milan…one of which was leased to a co-working company, that you can guess which one it was,” Sternlicht said. (Note: WeWork is Commercial Observer’s official guess.) “We’re going to flip it at, like, a 70 percent [return].”

“Seventy? As in, seven-zero?” asked Citigroup real estate executive Michael Bilerman, who moderated the conversation with Sternlicht.

Sternlicht responded in the affirmative.

“That’s good, for the students in the room,” Bilerman quipped. “That’s a very good [return].”

As Marc Holliday began explaining all SL Green Realty Corp. had done in the last year, he paused.

“I don’t know where to begin.”

SL Green had a banner year. It announced plans for One Madison Avenue, it took over the leasehold for 2 Herald Square,it churned out leases at One Vanderbilt and it even dipped into affordable housing.

It would be criminal if the firm landed anything short of No. 1.

But how would we live with ourselves if we didn’t give Related Companies the No. 1 spot on the year when Hudson Yards had its big debut? The naysayers were drowned out by the crowds who liked the enormous copper beehive (or whatever the kids call it). They love the shopping, the dining—even the Shed, notwithstanding the snide comparisons to airplane hangars.

Related wasn’t our No. 1 choice, either.

Last year, Brookfield Property Partners—which has been gobbling up properties and companies like it has a tapeworm—seized the title as New York City’s biggest commercial landlord. Brookfield will soon beat out Blackstone in assets under management globally, thanks to buying Oaktree Capital Management. We didn’t even mention the millions of square feet it unveiled at Manhattan West. We felt that was worth a lot.

Last year was, in essence, an embarrassment of riches for the real estate industry. These are the top players.—Max Gross

The 2019 Power 100 Issue:

Welcome to the List
The Bezos Factor: Who Fell a Few Rungs Thanks to Amazon
Biggest Jumps
Power Landlords: The Guys Who’ve Got the Biggest Portfolios in New York
Power Designers: The Most Powerful Eyes in the Business